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Case Against Texas Business Tax Before Top Court

AUSTIN (AP) – Attorneys for the state are set to defend Texas’ business tax.

Claims that it violates the Texas Constitution are part of a case starting Monday in the Texas Supreme Court.

A Boerne insurance firm filed a lawsuit in July, claiming the tax violates a constitutional provision that requires the Legislature to get voter approval before imposing an income tax, according to a report in the Austin American-Statesman.

The case hinges on whether the margins tax — implemented in 2006 as part of the court-ordered school finance fix — constitutes an income tax when applied to certain business partnerships.
The tax is a major source of funding for public education.

The law includes a provision that any legal challenges to the law would go straight to the Texas Supreme Court.